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The Economics of Russian Aggression

In the early 1800’s Carl von Clausewitz, the father of modern military theory, wrote, “War is the continuation of politics by other means.” Simply stated, war is a forcible way to meet a desired political end state. War in the classical sense is decisive set of violent engagements where oppositional forces “duke it out” until surrender is achieved. In the modern world, decisive conflict between state actors has become less acceptable and less violent. Today, more divisive, but still forcible approaches are being used to manipulate a desired political end state.

This first became apparent in the Cold War. Neither the Western nations nor the USSR were willing to commit to total war, and in 1991 the economic unity of the West was able to force USSR’s surrender and subsequent diaspora. The Cold War was not the only catalyst for economic unity, but for the purposes of this paper it important to understand that it did stimulate economic unity. It also furthered the political divide between the West (Americas, Europe, and Australia) and the East (Asia, Middle East). The need for strong allied fronts on both sides of the conflict invigorated globalization and global economy. After the fall of the Soviet Union in 1991, globalization continued fueled by technological advancement and the increased global demand for extraction commodities.

The interconnectivity of global economic markets and the dichotomy between the East and West directly led to a new type of conflict, coined “economic warfare”. Aircraft, ships, and tanks were replaced with sanctions, energy policy, and financial controls. Economic warfare can be understood through the lens of modern Russian aggression. Specifically, one must analyze: Russian economic objectives, trade agreements, hybrid use of both the economy and traditional forces in the Georgian and Ukraine, and the West’s economic response.

Russian aggression began in 2008, with the annexation of South Ossetia, Georgia. It continued through 2010-2012 utilizing aggressive trade agreements with Libya, Syria, and Iran that systematically relieved those countries of debt, proliferated defense systems (weapons), and gave Russia rights to extraction commodities (fossil fuels). In 2013-2014, Russian aggression peaked with the annexation of Crimea, Ukraine. This cost Ukraine nearly 20% of its Gross National Product (GNP), and gave Russia exploration rights to off-shore (Black Sea) oil repositories valued over three trillion dollars. A deeper analysis of Russia’s foreign and economic policy illuminates Russia’s primary economic objectives.